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Sales Tax Relief for Nebraska Farmers

Russ Quinn
By  Russ Quinn , DTN Staff Reporter
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Bills for repair work by dealerships and others no longer will include sales tax for Nebraska farmers. Only seven other states currently subject repairs and parts for agricultural equipment to sales tax. (DTN/The Progressive Farmer photo by Jim Patrico)

Good news, Nebraska farmers and ranchers!

As of Oct. 1, 2014, the state's agricultural producers will not have to pay a state sales tax on repairs and replacement parts for agricultural machinery and equipment. The elimination of sales tax on ag repairs and replacement parts came about when legislation passed during the 2014 session of the Nebraska Unicameral.

Nebraska Governor Dave Heineman signed the bill into law in April.

According to the Nebraska Farm Bureau, Nebraska had been one of only eight states that charged a state sales tax on repair and replacement parts on agricultural machinery and equipment.

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"Nebraska's previous sales tax policy put Nebraska farmers and ranchers doing business with in-state equipment dealers at a competitive disadvantage with their counterparts in neighboring states," Steve Nelson, Nebraska Farm Bureau president, said in a press release. "It also created an incentive for Nebraska farmers and ranchers to cross state lines for repair needs."

The Nebraska Farm Bureau said the change in state law is estimated to save the state's farmers and ranchers $9 million to $10 million collectively each year.

The Nebraska Department of Revenue has a website to answer questions about what is exempt from state sales tax. The site is http://www.revenue.nebraska.gov/….

As a Nebraska farmer myself who has purchased his fair share of replacement parts and paid for repairs to our farm's machinery, I whole-heartedly welcome this news. Anything that makes that parts/repair bills (which are expensive to start with) a little lower is perfectly fine with me.

The issue of state sales tax regarding agriculture has always kind of confused me. I knew some ag products and services were exempt from state sales tax. But other things, such as repairs and replacement parts, were not.

I would have thought everything concerning ag would have been exempt or nothing would have been exempt. Obviously, basic common sense and state government policies do not go hand-in-hand.

The issue of sales tax exemption on farm machinery repairs and replacement parts is not only a hot topic in my home state but in other Midwestern states as well.

I wrote a Machinery Chatter blog a few years back about Minnesota trying to eliminate a state sales tax on farm equipment repairs and replacement parts. The change in Minnesota's state sales tax regarding parts and repairs did eventually get passed. But it was a slow process, taking a couple sessions of the Minnesota statehouse, much to the dismay of agricultural groups and farmers.

So celebrate, Nebraska farmers and ranchers, as your state sales tax burden has been eased. Now if the legislature could just do something about rising property taxes and personal property taxes.

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Bonnie Dukowitz
10/29/2014 | 7:49 PM CDT
Not quite correct. The life of this tax, along with a warehouse to warehouse tax in Minnesota was very short lived. The very next session, after passage by the DFL majorities, the law was reversed due to tremendous pressure on the DFL Governor, from many industry groups.